The crypto world is totally buzzing these days with new projects popping up every other day. There is a wide variety of projects offering options like moderate but safe and stable rate of interests which are better suited. There also projects offering crazy rate of returns of over 1000% which in almost all cases are unsustainable in the long term so soon the rate falls down to normal levels and everyone seems to be gambling upon what will be the best time to make an exit from such projects. This wild rush has also led to growth in a lot of scam projects as well which offer crazy rates to lure new investors.
There has been a huge demand for these DeFI projects and there are takers for the safest and riskiest projects. That is the reason why most of the DeFI projects have accumulated really high levels of market capitalization. The top 100 list of crypto project by market cap is full of tokens like AAVE, Maker, COMP, UNI etc. Many projects make temporary splashes like Sushiswap which was climbing up the market cap charts at breakneck speeds but eventually fizzled out.
The biggest impact these projects had was that due to the insane level of transaction demand they created Ethereum blockchain got clogged and this in turn spiked the transaction costs. We are now at such unimaginable levels that small investors who want to invest less than $100 will not make profit for years due to the fees they will have to pay to deposit and withdraw their coins.
This has been a byproduct of the highly skewed exclusive dependence on ETH blockchain by all DeFI projects. There were some alternate projects built upon EOS and other chains but they never got a significant userbase.
In this article I will be talking about a project which makes innovative use of cross-chain interoperability offered by Polkadot blockchain.
What Exactly is Equilibrium?
Equilibrium is positioning itself as a cross-chain money market so you don’t have to limit yourself to ERC20 tokens for lending and borrowing and can select whichever coins you like. This would also free you from the exploitative ETH fees. They even have synthetic asset trading on their roadmap to be implemented next year.
Another unique feature of Equilibrium is that it will cover all major DeFI operations under a single project. Currently you use one platform for lending/borrowing, another for staking and yet another for trading. Equilibrium will be a one stop shop for all DeFI operations covering all major currencies.
What are the Key Advantages over other DeFI platforms?
· Cross-chain interoperability across ETH, BTC, XRP, EOS, TRN, XTZ by leveraging Polkadot framework
· Lower collateral level- Equilibrium maintains a 110% collateral which will be significantly lower than the 150–200% required by most of the DeFI platforms
· Higher liquidity- This will be provided by introducing the concept of Bailsmen which will provide an additional layer of liquidity over and above that provided by the platform users. This will reduce the risk of users getting liquidated by a sudden market movement
· Polkadot blockchain will ensure scalability and cross-chain interoperability
Which is the Team behind Equilibrium?
Considering how nascent the crypto industry is it is essential that the team behind the project knows what they are doing and have relevant experience of cryptocurrencies.
Equilibrium is led by Alex Melikhov who was also part of the founders of Changelly and EOSDT. He would be bringing the lessons learnt and experience gained from Changelly into this project.
What is their Native Token?
Their ecosystem involves 2 native currencies — EQ tokens and NUT (Native Utility Token).
EQ tokens will serve the following functions:
· Enable Governance- token holders will vote for future changes on the platform
· Transaction fees- as the platform will be using multiple currencies and not just ETH, this token will be used to pay for transaction and processing fee for all the operations
· Staking Rewards- The platform will support Proof of Stake and user will be rewarded in EQ
· Liquidity reward- Users providing liquidity will earn additional rewards in EQ
NUT is their utility token which will be available on exchanges for trading. It is already listed on EOSFinex and Bancor and is expected to be listed on more popular exchanges once the projects advances further on it’s roadmap.
The key difference between NUT and EQ is that NUT can be used only for EOS based products while EQ can be used on all products.
What are the Key Partnerships of Equilibrium?
I already mentioned about the collaboration with Polkadot which is essential to enable the core cross-chain interoperability. Some of the other alliances and partnerships which the project has achieved are the following:
· Web3 Foundation- Equilibrium had received a grant from Web3 Foundation to facilitate it’s migration to Polkadot. Web3 also backs Polkadot and actively supports initiatives which have the potential to raise the adoption of Polkadot.
· Quantstamp- Equilibrium has partnered with Quantstamp to audit it’s code for security and ensure it’s resiliency againt potential attacks and hacks. It will also help identify and resolve and vulnerabilities in the system.
· Chainlink- Equilibrium has formed an alliance with Chainlink which will enable it to offer synthetic assets on the platform. Price feed mechanism of Chainlink will also help in better evaluation of assets being loaned/ borrowed on the platform.
What is the Road ahead for Equilibrium?
In summary Equilibrium is planning to address some very critical use cases like scalability and cross-chain interoperability which if implemented successfully will help a major part of the crypto community. There will be many takers who are waiting for a DeFI platform which let’s them operate with BTC, XTZ, EOS, TRN in addition to the ERC20 tokens. Everyone would be excited at the prospects of a project which will end the issue of ever-rising ETH fees on the DeFI platforms.
I would be closely monitoring this project over the coming months and I hope that they are able to roll out their platform early next year. The success of this project will be a significant gain for Polkadot as well and give it a solid boost in it’s mission to establish itself as a better alternate to Ethereum.
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